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Jupiter European Fund
The Jupiter European Fund is a concentrated portfolio of 35-45 stocks. It will have at least 70% of the portfolio invested in the shares of companies that are based in Europe (excluding the UK). The remainder of the fund may be invested in other assets, including shares of companies based elsewhere in the world and in other closed or open-ended funds (including funds managed by Jupiter and its associates), as well as cash. It has recently had a change of manager, with Alexander Darwall leaving Jupiter and being replaced on the fund by Mark Nichols and Mark Heslop.
Our opinion
Mark Nichols is probably among the best successors Jupiter could have found for this fund and we were very impressed with him when he co-managed Elite Rated Threadneedle European Select with David Dudding.
He also has a very similar investment style and philosophy to that of Alexander, looking for quality growth companies. The major difference is that the fund is not only a lot larger, but also a lot more concentrated, so we will want to see how he settles into the new mandate.
Company description
Founded in 1985, Jupiter Asset Management has grown from a specialist investment boutique to a global fund management company. It provides a range of products from bond and equity funds to multi-asset strategies for both retail and institutional clients. Jupiter is a strong proponent of active management and therefore gives its managers the freedom to run their funds their way, without having to adhere to a 'house' view. In July 2020, Jupiter completed its acquisition of Merian Global Investors.
Fund manager
Mark Nichols joined Jupiter in July 2019 to manage the Jupiter European fund. Prior to joining Jupiter, Mark co-managed the Elite Rated Threadneedle European Select fund at Columbia Threadneedle. He began his investment career in the European equities team at Invesco in 2001, before moving to BMO Global Asset Management (F&C).
Mark Heslop joined Jupiter in September 2019 as a European equity manager and smaller companies specialist. Prior to joining Jupiter, Mark was an equity fund manager for 11 years at Colombia Threadneedle, where he managed a global smaller companies fund and a European smaller companies fund. He began his investment career as a chemicals and industrials analyst at Citi in 1999.
Investment process
The fund managers try to identify companies with first class management teams, strong business models exposed to the drivers of long-term growth and sustainable returns on capital.
Their investment approach is centred around achieving a depth of understanding in businesses and identifying the risks to their business models and growth expectations. When assessing stocks for inclusion in the portfolio, they consider a time horizon of 3-5 years and beyond, focusing on specific characteristics such as barriers to entry, strong branding, the holding of key patents, efficiencies of scale, and existing customers having high switching costs.
Another characteristic is industry structure, where they look for industries where there is no single customer who can drive prices down and no single supplier who can squeeze profit margins – because that means businesses are better able to generate consistent cashflow.
ESG
ESG - Limited
With this fund, Mark is looking to generate the best long-term returns for clients without taking unnecessary risk. This means the fund can have exposure to firms that have environmental, social and governance issues, so long as those risks are understood and are not felt to be detrimental to a firm’s long-term potential. The fund has a quality approach and is therefore looking for firms with sustainable business models, with pricing power and barriers to entry for new competitors. As such, the fund is unlikely to hold industries many investors would consider unpalatable, such as oil and gas companies, as they don’t have these characteristics (pricing power in this instance). However, this is more of an outcome of the approach rather than an explicit guide to investment.
Risk
The concentrated nature of this fund means there can be stock-specific risk. The portfolio will typically be underweight in the telecoms, banking and property sectors and quite overweight companies with exposure to global revenues and hence to foreign currencies, particularly US dollars. There can therefore be some currency risk too.
Read more about this fund
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